Pensions

Sometimes you hear of a business or employer cutting back on its employees' pensions (and sometimes governments cutting back citizens' pensions), saying it can no longer afford the pension.

Let's think about how you make a pension. You have the employees and the employer all pay in some money, usually a proportion of the salary. The amount of money they need to pay in is determined by professional pension managers. They calculate how much money is needed using actuarial tables and other complicated tools that I don't understand, then they take the money and invest it to create a fund that will pay out the promised amounts on the promised schedule.

If the pension is no longer sustainable, that means a) the pension managers fucked up, and b) more money is needed in the pension fund.

But do the people in charge of managing the pension ever face any consequences for fucking up? And do the employees ever even get offered the chance to pay what it costs to make the pension sustainable?

And then, as a result of the fact that professional pension managers who manage pensions full-time can't seem to manage pensions properly, the industry is moving towards defined contribution pensions, where those of us who aren't professional pension managers have to figure out how to manage our own pensions on top of our own full-time work.

Analogy: You hire a contractor to make your home wheelchair accessible, because a member of the household is going to need a wheelchair. You don't know much about making houses accessible, so you say "Work out what needs to be done, tell me how much it will cost, and I'll pay you in monthly installments." So the contractor works this out, you agree upon a price, and they start working and you start paying monthly installments. Then, after some time has passed, the contractor says "I can't do this. It will be do expensive." And walks away, leaving you with a half-finished, still-inaccessible house, and out a bunch of money. They never even tell you how much it will cost to finish, and when you try to hire someone to finish the job they all keep telling you to do it yourself.

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Come to think of it, this is the core message of Occupy that the media claim to find so elusive. We want those with all the money and power to do their jobs properly and not hurt anyone. It's not much to ask, most people do it every day. If you're a pension manager, manage pensions properly. If you're an investment banker, make good investments. If you're an elected representative, represent the people who elected you. If they were doing their jobs properly and weren't hurting us, it wouldn't even occur to anywhere near as many people to calculate what percentage of the wealth they control.